Kasich heads to Lima for speech

Mayor to greet governor for State of the State talk with special book

COLUMBUS — When Mayor David Berger greets Gov. John Kasich today in Lima, he will present him with a recently published book, Rust Belt Resistance: How a Small Community Took on Big Oil and Won.

It’s the Lima history lesson that the Democratic mayor wants the Republican governor to walk away with. It never occurred to Mr. Berger that the book, written by Bluffton University history professor Perry Bush, could serve as inspiration as Mr. Kasich bucks the industry and some in his own party to hike taxes on shale oil and gas drilling.

In a rare evening speech in just the second State of the State address delivered outside Columbus, Mr. Kasich will undoubtedly remind his audience of the billions in budget shortfalls the state faced two years ago. Then he’ll point to the possibility that Ohio could finish the fiscal year on June 30 with a savings account of $1.9 billion.

The state’s unemployment rate has dropped to 6.7 percent, consistently well below the national average. But the first-term Republican faces pushback not only from Democrats but from some majority Republicans.

Some conservatives chafed, even as Democrats applauded, at Mr. Kasich’s decision to partner with the federal government to expand Medicaid — the health insurance of last resort for the low-income, disabled, and infirm — under President Obama’s health-care reform law.

Republicans and Democrats alike find fault with his tax reform plan, particularly a major expansion of the sales-tax base to professional services to help underwrite a 20 percent income-tax cut for individuals over three years and a 50 percent cut for small businesses.

The state’s sales-tax rate would decline half a penny to 5 cents on the dollar.

Democrats accuse Mr. Kasich of overselling his new K-12 education funding formula that he said would drive more money to poorer schools. The initial glow many superintendents experienced soon disappeared when they saw follow-up spreadsheets showing that 60 percent of them would see no increases while some wealthier suburban districts would see significant hikes.

Democrats have questioned why the administration wants to sock away $1.4 billion more in budget surpluses in addition to the nearly $500 million already in the rainy-day fund without making schools and local governments whole for deep cuts they suffered in the current budget.

Mr. Kasich last week dismissed the suggestion that his $63.3 billion, two-year budget proposal is fracturing his base.

“What I see is a nice, healthy, honest debate on ideas,” he said. “Big ideas always have controversy connected to them, and that’s OK. Look, I think healthy discussions are good.”

The Cleveland-based think tank Policy Matters argues that the tax shift from income toward consumption will disproportionately benefit wealthier taxpayers.

Its analysis shows the governor’s plan would give a $10,369 average annual tax cut to the top 1 percent earners, those making more than $335,000. Those earning between $33,000 and $51,000 would pay about $8 more overall while those making $18,000 or less would see an average increase of $63 as a result of the expanded sales tax base.

“Income-tax cuts will increase inequality in Ohio and do little for our economy,” said Zach Schiller, Policy Matters Ohio’s research director. “The Kasich administration proposal to broaden the sales-tax base, if done carefully, is helpful because our economy has shifted to services, many of which have been untaxed.”